Forget about the ceramic piggy bank or the jar filled with 2p coins, nowadays children as young as six can get their hands on contactless cards that they can use to make purchases in their favourite shops.
If you’ve been wondering whether to simply continue giving money to your child to pop into a money box or if you should set up an actual savings account then here’s why you should do the latter:
Saving for the future
To an 18-year-old, £1,000 is a lot of money and by saving just £5 a month for 18 years they can enjoy this little nest egg when the time comes for driving lessons and university. Of course, you’ll need to start them off but they can then start using their pocket money as they get older. By starting to save so young you can build up a large amount of money for them to enjoy later.
Better understanding of money
Children need to understand the importance of not spending all their money at once and it will encourage them to also think before asking for new toys or clothes from you in the future. Having a savings account that they can access teaches them that they cannot have any more items once that money is gone and you can even show them how far a certain amount can go. Use their savings account alongside other money teachings – such as how to source the best value for an item or how to compare prices.
You can also teach them about important financial features such as interest and tax on their savings – it’s something rarely featured in school curriculums and that many of us must work out for ourselves later in life! Give them a head start when they get their savings account.
A sense of pride
Challenge your child to save money and see how far they can go before needing to dip into their savings accounts, they’ll feel a sense of pride and achievement when they notice the amount going up. Give them physical money for completing chores then take them to your local branch to pay this in at the counter, showing them the whole process that goes into earning and saving money.
Allow them to take out a small amount on special occasions, such as their birthday or Christmas to buy their friends a small gift, and by purchasing these special items with money they know they have worked hard to save it will boost their confidence.
Trust in banking
For many of us, we still use the building society or bank that our parents set us a savings account with. Starting from an early age builds a sense of trust and loyalty, so if you want your kids to use the same banking as you because you believe they are the best choice start them early. They can always switch when they’re older.
What type of children’s savings account should you choose?
There are a huge number of children’s savings accounts out there, from those that allow kids to access them and withdraw cash to others that restrict access until they are a certain age. Many banks and buildings societies also offer freebies when opening up accounts, such as notebooks or even piggybanks to keep money safe until you can get into branch. Use a comparison site to determine which savings account best suits your ideals and your child’s needs.